Chinese Mining Enterprises in Zambia “Bad Employers”?

A November 2011 Human Rights Watch report on alleged labor abuses in four mining firms in Zambia parented by state-owned enterprise China Non-ferrous Metal Mining Co. (CNMC) has predictably become a media sensation.Countless news outlets and blogs have reported that the Chinese firms are “bad employers” compared to the five Western-based major foreign investors in Zambias copper mining industry, as regards safety, pay, work hours and union rights.

Over the past decade, with the steady rise of Chinese investment in Africa, Chi- nese corporations in the continent have come under closer scrutiny by the media, academic circles and nongovernmental organizations. Most Western study reports and news releases portray Chinese investors as “bad employers.” This stigma stings and sticks, but is it warranted?

Entrenched Prejudice

CNMC is a small player among foreign mining companies in Zambia. Under pressure from the World Bank and International Monetary Fund, the African country embarked on privatization in the late 1990s. During the rule of its first democratically elected president Frederick Chiluba, 280 formerly state-owned companies, which accounted for 85 percent of the national economy, were privatized. Of these, 65 percent ended up in the hands of individual Zambians, 29 percent were bought by foreign companies, mostly British, and six percent closed. In tandem with this privatization storm came a slew of liberal economic policies. The dual transitions resulted in upheavals in the domestic labor market, rampant encroachment of employees benefits and a marked deterioration of workplace conditions.

Further change came during the years from 1997 to 2000, when Zambias national copper mines were split into seven parcels and sold to foreign companies. CNMC purchased Chambishi Mine in 1998, and Luanshya Mine in 2009. It has four mining and refining operations in the country in total – Non-Ferrous Company Africa (NFCA); the Luanshya Copper Mine (LCM); the Chambishi Copper Smelter; and the Chambishi WetProcessing Smelting Plant. The first two account for merely 4.7 percent of the copper concentrate produced by international mining companies in Zambia, and just 4.2 percent of domestic companies are included.

An explosion at the explosive plant of the Chambishi Copper Smelter in 2005 that killed 46 Zambian workers, however, drew disproportionate attention from the Zambian public and the world to the Chinese owners of this moderate-sized operation,and triggered off an anti-China uproar.

In his 2005 presidential campaign, Michael Sata, leader of the Patriotic Front(PF) movement, appealed to voters using fierce anti-China slogans. In the following years he continued to condemn companies from China and other Asian countries. In a 2010 interview, Sata accused Chinese mining firms of creating slave labor conditions.

Miners are the main source of the PFs support and its main target voters. The influence of the PF as well as that of foreign powers is evident in the disputes between local employees and CNMC companies in Zambia. It is an entrenched bias among many Zambians that English speaking denotes good education and that white people are more familiar with mining.

Ironically this mentality can be traced to the colonial age, when the local mining industry was monopolized by white immigrants. Even after the countrys independence, there were still white managers in its state-owned mining companies. Another PF leader, Guy Scott, who is of white English and Scottish descent and currently Zambias vice president, made the venomous comment in 2006: “Weve had bad people before. The whites were bad, the Indians were worse, but the Chinese are the worst of all.”

During a 2008 meeting a Zambian executive who was educated in the UK and worked for the Zambian government for many years told us that the vacuum of in- formation about China and Chinese people among his countrymen opens the door for scams by demagogues. In his opinion, reports from Washington, London and Paris about Chinas presence in Africa are readily braced by pro-U.S-and-Europe Africans, seeding prejudice against Chinese investors. It is a widely held preconception in Zambia that Chinese lack mining experience, and that only whites are experts at it.Such prejudice is purposely nurtured by certain politicians in Zambia. By shifting all the blame on Chinese companies, they actually shield other foreign businesses in the mining industry from public attention and scrutiny.

simplistic statistics

Days after Human Rights Watch issued its CNMC report, president of the Mineworkers Union of Zambia (MUZ) Oswell Munyenyembe responded by saying that China alone cannot be singled out as creating bad conditions for workers. “We cannot wholly condemn Chinese-owned mining houses. Remember that when we had the global crisis, no worker was retrenched at any Chinese mine [unlike at other mines]. Yes, they have their own problems like mistreating workers and not following labor laws, but other mining houses are also culprits in this area. It is not only the Chinese min- ing companies that are at fault.”

Determining whether a mining company is deficient in safety compared to other firms entails (other things being equal) ascertaining whether that firm accounts for disproportionate fatalities. Mining deaths in Zambia are not especially high by world standards, and Zambia is not included in the 60 most dangerous countries for miners. Statistics provided by the Mineworkers Union of Zambia (MUZ) on fatalities in all foreign-owned copper mines in the country indicate that CNMC is unexceptional, its fatalities in Zambia accounting for 11.5 percent of the countrys total from 2001 to late 2011. They are hence not disproportionate in terms of CNMCs share of activity, so contradicting the claim that CNMC mines safety conditions are markedly worse than its industry peers. Furthermore, the relative number of fatalities is not solely determined by the safety consciousness of mining firms, but also by operational configurations. Underground mines typically have more casualties than opencast mines. The deeper underground mining goes, the greater the likelihood of rock falls and casualties. CNMC firms have two mines in Zambia, one at Chambishi, which at over 1,000 meters is deep underground, and CNMC Luanshya (CLM), which is at least 580 meters underground. This also affects the wages paid to miners, as opencast mining is not only safer, but also cheaper. Other larger Zambian copper mining firms include a mixture of opencast and underground mines, or even just opencast mines, meaning that their operations are much safer by nature. Konkola Copper Mine (KCM) is owned by Vedanta, the UK Indian major. KCM Nchanga open pit mine (55 percent of production), plus KCM Nchanga underground mine (45 percent) had 32 fatalities from 2001 to 2011, while KCM Konkola underground mine had 31. Mopani Copper Mine (MCM) is owned by the Switzerland-based mining and metals trading giant Glencore. MCM Nkana has underground and opencast mines and had 55 fatalities from 2001 to 2011, while MCM Mufilira underground mine had 27 fatalities. Unsafe conditions of service remain an industry-wide problem, as detailed in a study by John Lungu of Copperbelt University and Alastair Fraser of Oxford University. There have also been firm-specific studies of the Chibuluma mine under South Africas Metorex firm and of KCM and MCM that have shown substantial safety problems. In a 2011 interview, the MSD Chief Inspector of Mines spoke negatively of the NFCAs first five years of operation since 2003. “It was the worst mine in terms of safety,” he said. “It was unwilling to do sufficient support work and didnt have proper ventilation.” Now, however, “NFCA is OK in terms of safety.”

No copper mining company, including CNMC, claims not to have safety and health problems. In mining operations, such problems always require urgent attention. Taking into account fatality figures and differences in the configuration of mines, however, there is no basis to claim that CNMC is the worst in terms of safety. To do so serves mainly to reinforce racial stereotypes that Chinese are cruel and have a disregard for human life that have endured for more than a century in the West and have now spread to Africa.

Racial Profiling

Human Rights Watch claims that“Chinese copper mining companies often pay base salaries of around onefourth that of their competitors for the same work.” CNMC Company officials have said that NFCAs overall average basic pay is about half that of KCM, while at CLM it is about 80 percent of KCMs level – the industrys highest.

We asked CEO Wang Chunlai about NFCAs reputation for low wages. He responded, “Wage levels are linked to the scale and age of the enterprise. In terms of scale, were ranked number five and in terms of cost of labor, number five or six.”He also pointed out that operations at NFCA are labor intensive, apparent from the annual per capita output. Deep underground operations and lower copper content make CNMC production more labor intensive, with lower productivity. NFCA and CLM together produced 4.7 percent of the Zambian foreign-owned copper industrys concentrate in 2010, but employed 10.5 percent of its workforce. NFCA and CLMs productivity is thus much lower than industry averages in both Zambia and China.

Wang also pointed out that CLM provides higher pay than NFCA because it is an older and more developed enterprise. The company thus has workers who have been at the company and developed experience for many years and therefore receive higher salaries. It is clear that simplistic statistics are poor indicators of the treatment of employees in terms of pay, bearing in mind that the starting pay is around the same at CLM as at NFCA. In a 2011 interview, John Lungu compared miners basic salaries at the two CNMC Zambia mines with the countrys largest foreign mining firms. His conclusion was that MCM and KCM are the best payers among the mine owners. Chinese companies have not caught up completely with the Western companies in terms of incomes in the mines, but neither are they conspicuously lagging behind. There has been great improvement.

In overlooking multiple-faceted labor issues, Human Rights Watch has in- discriminately accused CNMC of deeprooted, persistent human rights misdemeanors. CNMCs practices, seen in the context of Zambia copper industry, are worse in some respects, about the same in other respects (safety), and better in still other respects (job security). They are also slowly improving. When other firms retrenched or closed operations during the global economic crisis, CNMC firms promised “Three Nots”: not to reduce investment, not to cut down on production and not to lay off workers. In fact, instead of cutting its operations, CNMC bought Luanshya mine, which had been shuttered by its Swiss owner at the peak of the crisis. It re-hired laid-off workers and hired hundreds more. Furthermore, since 2012 the whole staff at NFCA and LCM have had permanent employees status, while KCM and MCM still hire large numbers of contract laborers. These facts belie Human Rights Watchs claim that CNMC is a “bad employer.”

There is room for improvement across the board for mine workers in Zambia, who still receive subsistence wages and live in underserviced communities. But this possibility is diminished, rather than more likely, when Chinese firms are singled out and erroneously accused of being the worst employers. Human Rights Watchs exclusive focus on CNMC firms in Zambia, in terms of treatment of workers, serves no useful purpose. Rather, it plays into the racial hierarchy that has been established in Zambia and beyond. This bias has been shown as unwarranted by John Lungu and Alastair Fraser in their 2007 report. It is out-and-out racism to generalize Chinese mining corporations as worse than those from white countries and India, even though the latter are far from impeccable in their operations.

Faced with such a poisonous environment, however, Chinese businesses abroad should rise above prejudices and respond to the increasing malignancy directed at them by investigating their own conduct and dealing with the problems that exist within their companies.